Factors that impact on costs

In competitive manufacturing, the 8 wastes are all key factors that impact on costs. 
To be a competitive and global organisation employees must understand the factors that impact on costs and how they can improve costs that are within their control.

Management functions

The management of an organisation performs three broad functions.

• Planning, which requires management to look ahead and establish strategic objectives. The key objective is to add value to the business under its control.
• Directing and motivating, which involves coordinating diverse activities and human resources to produce a smooth running organisation.
• Controlling, which is keeping the organisation's activities on track. Management determines whether planned goals are being met and what changes are necessary to achieve the strategic objectives.

To be able to perform the three functions effectively management needs information, especially information related to costs, as management uses this information to make informed decisions.
Management needs knowledge of the costs of the individual production lines and products, which products are profitable and the associated labour costs. These costs can then be broken down further to get more detailed information which will provide management with the specific information relating to each product. Management will then be able to plan and make informed and strategic decisions that will benefit the company.